Krungthai Bank (KTB) has set a target for its non-performing loans (NPLs) this year to be lower than their current level of 100 billion baht, says KTB president Payong Srivanich.
Plans to lower the bank's NPL ratio comprise debt write-offs and restructuring for KTB customers, allowing indebted businesses to resume their operations, said Mr Payong.
The bank's full-year loan growth in 2017 is projected at 1%, far below the initial target of 4-6%, because of payment defaults by financially beleaguered Energy Earth Plc worth 12 billion baht, as well as bad debts incurred by a group of rice millers, he said.
Energy Earth submitted a rehabilitation petition through the Central Bankruptcy Court on July 24 because it had debt in excess of assets, having recorded contingent liabilities worth 26 billion baht.
Losses incurred from these two groups have dented the loan base due to debt write-offs, said Mr Payong.
Regarding Energy Earth's debt resolution, KTB hopes the process will be in step with the given time line, following the business rehabilitation plan, he said, adding the bank wants the company to regain its vigor as fast as possible. But an assessment has to be made as to whether the company can totally resolve its debt problem, said Mr Payong.
Meanwhile, KTB's 1% loan expansion derives from several segments, with state loans recording the highest growth, he said.
Next year's loan growth outlook remains under consideration, with KTB's board of directors to announce that target later this month, said Mr Payong.
Based on an initial estimate, loan growth of a major financial institution should be twice Thailand's economic growth rate, which is expected to expand between 3.5-4% in 2018, he said.
KTB is currently in the process of adjusting its loan review process to be more systematic, streamlining the loan issuance process and improving its "early warning" system for potentially bad loans, said Mr Payong.
The bank has also adjusted its loan portfolio to be more balanced, as some rice millers and major businesses have bigger credit lines than other segments, he said.
NPLs will not disappear after adjusting KTB's loan portfolio, but soured loans will not reach an unexpected threshold, said Mr Payong.
